Italy Emerges as Biggest Obstacle to Eurozone Banking Union

In 2012 eurozone leaders vowed to break the “doom loop” by which national governments and their banking systems could drag each other down in a financial crisis, the Financial Times reported. This began the long journey towards a banking union in which taxpayers would no longer be on the hook for failing banks. Had the leaders fully understood what they were signing up for, they may not even have started. The logical destination of breaking the doom loop is to relinquish one of a government’s most attractive powers — the ability to make “its” banks finance its deficits when nobody else is willing. The fear of losing a captive market for sovereign bonds is now turning into a seemingly insurmountable obstacle to progress, notably in one country. Read more